In the face of mounting concerns about the disparity in help available, Chancellor Rishi Sunak has announced changes to the government’s coronavirus job support scheme (JSS) to provide additional funding for businesses placed under tighter restrictions but not legally required to close
In a statement to the House of Commons, Sunak emphasised that the current three tier approach to introducing lockdown measures was ‘the right way to control the spread of the virus’, but acknowledged that ‘even businesses which remain open face profound economic uncertainty.’
So far, enhanced support has only been on offer to those businesses placed in the highest level of alert, tier three.
However, Sunak singled out the hospitality, leisure and accommodation sector as an area which is experiencing significant difficulties as a result of new rules under the tier two approach, which does not close a business but limits the number of people who can meet indoors and requires a 10pm curfew.
Sunak said the government is making three changes to existing support schemes in response.
Firstly, there is a new support scheme for businesses in tier two areas, with funding for local authorities to distribute grants in a flexible manner to those worst affected.
Every business premises will be eligible for up to £2,100 each month they are under tier two restrictions, and the payments are retrospective for any area which has been under these rules since August.
These grants could benefit around 150,000 businesses in England, including hotels, restaurants, B&Bs and others which are not legally required to close but have been adversely affected by local restrictions nonetheless.
Secondly, for businesses which have not been legally required to close but which are suffering an impact from tier two restrictions, the JSS rules have been amended.
Instead of requiring employees to be brought back for 33% of their original hours, they now need only be employed for 20% of their hours.
The employer’s contribution to wage costs under the JSS for those not working has been cut from 33% to 5%, with business based in all alert levels eligible.
Thirdly, Sunak said the government was doubling the self employed income support scheme (SEISS) grant from 20% of previous earnings to 40%, to a maximum of £3750 per month.
Sunak said: ‘I’ve always said that we must be ready to adapt our financial support as the situation evolves, and that is what we are doing today. These changes mean that our support will reach many more people and protect many more jobs.
‘I know that the introduction of further restrictions has left many people worried for themselves, their families and communities. I hope the government’s stepped-up support can be part of the country pulling together in the coming months.’
The JSS starts to operate from 1 November and covers all nations of the UK. For every hour not worked, the employee will be paid up to two-thirds of their usual salary.
The government will provide up to 61.67% of wages for hours not worked, up to £1541.75 per month (more than doubling the maximum payment of £697.92 under the previous rules).
Employers using the scheme will also be able to claim the job retention bonus (JRB) for each employee that meets the eligibility criteria of the JRB, which is worth £1,000 per employee.
There are two additional taxable SEISS grants, available to anyone who was previously eligible for the SEISS grant one and grant two, and meets the eligibility criteria.
Grants will be paid in two lump sum instalments each covering three months. The first grant will cover a three-month period from the start of November 2020 until the end of January 2021. This is calculated based on 40% of three months’ average trading profits, paid out in a single instalment and capped at £3,750.
The second grant will cover a three-month period from the start of February until the end of April 2021. The government will review the level of the second grant and set this in due course.
The funding local authorities will receive will be based on the number of hospitality, hotel, B&B, and leisure businesses in their area.
Local authorities will receive a funding amount that will be the equivalent of:
• For properties with a rateable value of £15,000 or under, grants of £934 per month.
• For properties with a rateable value of between £15,000-£51,000, grants of £1,400 per month.
• For properties with a rateable value of £51,000, grants of £2,100 per month.
This is equivalent to 70% of the grant amounts given to legally closed businesses under tier three, the highest level of restrictions (worth up to £3,000/month).
Local authorities will also receive a 5% top up amount to these implied grant amounts to cover other businesses that might be affected by the local restrictions, but which do not neatly fit into these categories.
Simon Michaels, CEO of business solutions at accountancy firm HW Fisher said: ‘This is clearly targeted at the most vulnerable businesses – hospitality, leisure and retail and of course any support is welcome
‘However will this be a sufficient incentive for businesses already struggling to retain staff?
‘This is focussed on “viable jobs” throughout this six month period, meaning an employee has to work a minimum 33% of their usual hours.
‘A struggling SME will still have to pay the salary for time worked, a third of salary for time not worked plus 100% of employers national insurance and pension. It’s a big ask for SME’s that are struggling themselves afford to pay employees for the time that they are not working.
‘The government are contributing, but employers are being asked to fund a “redundant workforce” for some industries on the basis that this is a short-term economic blip!’